Gloom & Doom and Why We’re Still Looking Good

SYNOPSIS
We’ve clearly had the worst week of 2015 last week with all major indexes taking a one-week decline of 5-7%. Nothing was untouched in the rush to the exits. This is going out Monday after the close, and the situation is horribly worse than what you’ll see in our weekly charts based on last Friday’s close, and the discussion around those.

ProfiTrend Portfolio… The annualized growth rate for the ProfiTrend Portfolio is now at +162%. That’s down from 226% the previous week, but you can obviously see how well our holdings are performing relative to the S&P 500 Index and S&P/TSX Composite Index.
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PTA Commentary… Gloom & Doom and Why We’re Still Looking Good
Our commentary this week is brief. We do a short walk-through to remind you why our PTP portfolio (and hopefully yours too, if you’ve been following our lead) hasn’t been hit too badly, while those around us in the “buy/hold” camp are once again praying and deluding themselves into believing that in “the long run” they’ll find salvation. We don’t claim to have a crystal ball to foresee when major sharp declines will occur, but we do nag you regularly when the odds are mostly against you when buying new long positions. That’s also an invitation to take the more profitable short side.

The Importance of Tracking Market Breadth

SYNOPSIS
There was a modest improvement in the North American equities investment landscape last week, but nothing to write home about. The S&P 500 and DJI gained a little over half a percentage point, while the one-week returns were practically zero to negative for all other indexes in our set. All trend values are negative, with the exception of the S&P 500, which is poised at exactly zero.

ProfiTrend Portfolio… The annualized growth rate for the ProfiTrend Portfolio is now at +226%, up from 143% last time. It may seem staggering that we can be doing so well under current market conditions, but there are some good reasons that will become apparent in the body of this week’s TrendWatch Weekly. Dropping losers and hanging onto winners is always key, but a few short positions can’t hurt either under these circumstances.

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PTA Commentary… The Importance of Tracking Market Breadth
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If you think that “bad breadth” is a really awful pun, you’re in good company. This pun, however, has been around at least since the early 1900s. Bad breadth is at least as important as real bad breath, believe me. The even more important issue is that market breadth is all too often ignored nowadays. As it turns out, this is a perfect time to talk about it, because breadth sucks right now… and has since April/May. So check out our coverage on what market breadth is, how it’s measured and how you should adjust your investment behaviour accordingly.

Smart Money… The latest State Street Investor Confidence Index results for July were released last week, and as usual we post the results every week until the next monthly update. The Global ICI decreased to 114.6, down 12.5 points from June’s revised reading of 127.1. Confidence among North American investors decreased with the North American ICI falling 20.6 points to 122.6, down from June’s revised reading of 143.2. Meanwhile, the Asia ICI rose by 2.6 points to 89.5 while the European ICI fell 2.1 points to 100.4. In short, in spite of declines, equities are still favoured over lower risk investments except in Asia. The results for August will be revealed on August 25.

Featured Video… The 81 parts of Google
We normally don’t single out individual companies, when picking a video to feature, but this one is nicely done. As Google is restructuring under the umbrella Alphabet name, tech investors in particular might want to learn more about everything that Google is up to. It’s way more than search and ads nowadays. Scan the 81 separate ventures that are now part of the package. The video is embedded in the full version of TrendWatch Weekly, but you can also link to it here.

Gold, Oil & the Dancing Dollar!

SYNOPSIS
It’s still gloom-and-doom as far as we’re concerned, although you’d never know it if you’re a regular business TV viewer. The majority of both Canadian and US stocks have been trending lower since mid-May, as you regular readers will know by now. There are always a few exceptions in a few still-improving market sectors that are still climbing, but for how much longer?

ProfiTrend Portfolio… The annualized growth rate for the ProfiTrend Portfolio is now at +143%, up from 123% last time. In spite of horrifically weak broad market conditions, we’re still well ahead of the benchmark indexes.

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PTA Research… Gold, Oil & the Dancing Dollar!

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If anything is weighing heavily on the Canadian stock market, it’s the declining prices of commodities across the board for well over a year now… gold and oil in particular. This week we once again use the “relative” in relative trend analysis™ (RTA) to put these events in perspective. We thoroughly examine how gold and crude oil have been performing relative to the broad Commodity Research Bureau Index (CRB), and also to the all-important US dollar (USD). There are a few surprises along the way, and of course we draw out the implications for investors.

Smart Money… The latest State Street Investor Confidence Index results for July were released last week, and as usual we post the results every week until the next monthly update. The Global ICI decreased to 114.6, down 12.5 points from June’s revised reading of 127.1. Confidence among North American investors decreased with the North American ICI falling 20.6 points to 122.6, down from June’s revised reading of 143.2. Meanwhile, the Asia ICI rose by 2.6 points to 89.5 while the European ICI fell 2.1 points to 100.4. In short, in spite of declines, equities are still favoured over lower risk investments except in Asia. The results for August will be revealed on August 25.

Seasonality… Generally speaking, August is not a great month for appreciation in the equities markets. Of the 12 months it ranks 10th with the S&P 500, 10th with the DJI, 11th with Nasdaq and 10th with the S&P/TSX Composite Index. Even among the 10 GICS sectors that we track, only Utilities tend to show modest gains in August. Utilities outperform the S&P 500 63% of the time in August.

Featured Video… Farewell to John Stewart & The Daily Show
For 16 years Jon Stewart has been a critic and a conscience for everything that’s wrong about America. His platform was The Daily Show… a 3-4 night per week comedy/satire vehicle that he made famous. The last episode (with him as host) aired last Thursday. Bloomberg TV managed to pull out some highlights from his many critiques of Wall St. over the years. We have them in a two-minute video clip in the newsletter.

Summer Doldrums Continue

SYNOPSIS

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Conditions are still bearish, but in a lazy, summer doldrums kind of way. There was a modest rebound last week; and for a change, the S&P/TSX Composite Index gained more on a one-week basis than the other major indexes we chart. Nasdaq continues to lead on a trend basis, although 0.2%/week is nothing to write home about.

ProfiTrend Portfolio… The annualized growth rate for the ProfiTrend Portfolio is now at +123%, up from 109% last time. In spite of horrifically weak broad market conditions, we’re still well ahead of the benchmark indexes. And, in case you’re wondering, we only have one short position, and that one has turned against us.
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Smart Money… The latest State Street Investor Confidence Index results for July were released last week, and as usual we post the results every week until the next monthly update. The Global ICI decreased to 114.6, down 12.5 points from June’s revised reading of 127.1. Confidence among North American investors decreased with the North American ICI falling 20.6 points to 122.6, down from June’s revised reading of 143.2. Meanwhile, the Asia ICI rose by 2.6 points to 89.5 while the European ICI fell 2.1 points to 100.4. In short, in spite of declines, equities are still favoured over lower risk investments except in Asia. The results for August will be revealed on August 25.

Seasonality… Generally speaking, August is not a great month for appreciation in the equities markets. Of the 12 months it ranks 10th with the S&P 500, 10th with the DJI, 11th with Nasdaq and 10th with the S&P/TSX Composite Index. Even among the 10 GICS sectors that we track, only Utilities tend to show modest gains in August. Utilities outperform the S&P 500 63% of the time in August.

Featured Video… What’s happening with commodities?
Even if you prefer not to invest in commodities per se via futures contracts, ETPs, etc., at one time or another you’ll be tempted to buy some of the stocks that produce commodities. In Canada that’s a large proportion of all the stocks listed on Canadian exchanges. And, while the overall percentage is lower in the US, the Materials equities sector can’t be ignored either. So check out this brief but informative video on the state of commodities right now. The video is embedded in the full newsletter, or you can find it by following this link.

Correlation, Causation, Beta, Dispersion & Diversification

SYNOPSIS
This is a blockbuster issue in many ways… new charting features at the site, a new SSICI report on where the smart money is going, a fun video comparing your financial advisor to a monkey, and perhaps an overkill discussion of the list of terms in our title and their implications. And, as usual, we continue to dwell on the profoundly negative impacts of daily media reports. We hope that some of this may make up for another devastating blow to the downside in equities last week. All the major indexes declined 2.2% (S&P 500) to 5.8% (S&P/TSX Venture Index). We’re back to where only Nasdaq has a tiny, but positive trend value.

ProfiTrend Portfolio… The annualized growth rate for the ProfiTrend Portfolio is now at +109%, up from 96% last time. In spite of horrifically weak broad market conditions, we’re still well ahead of the benchmark indexes, which are now overwhelmingly negative.
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Smart Money… The latest State Street Investor Confidence Index results for July are just out. The Global ICI decreased to 114.6, down 12.5 points from June’s revised reading of 127.1. Confidence among North American investors decreased with the North American ICI falling 20.6 points to 122.6, down from June’s revised reading of 143.2. Meanwhile, the Asia ICI rose by 2.6 points to 89.5 while the European ICI fell 2.1 points to 100.4. In short, in spite of declines, equities are still favoured over lower risk investments except in Asia. The results for August will be revealed on August 25.

New Charting Features… Last week we introduced a do-it-yourself charting tool to the web site within the Data & Charts Workbooks section. It’s for you to use as required to chart your favourite indexes or stocks. It’s quite sophisticated, with many options to choose from. You can compare stocks with indexes or stocks with stocks, run technical analyses, check out news and social perspectives on stocks and much more. This week we add another charting tool… to get a quick glimpse of the latest data on major indexes, commodities and foreign exchange rates (Forex). Popping up the latest chart within each of those categories is easy, but you can also delve much deeper by linking to a full screen chart with dozens of ways to compare, annotate and markup any particular chart. Then, you can save, store or share it with others.
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Featured Video… Is Your Financial Advisor Any Smarter than a Monkey? Doubtful!
Let Laurie Santos convince you that your financial advisor or money manager may not be any more successful with your money than a little brown Capuchin monkey. The video is embedded in the full version of TrendWatch Weekly. Set aside about 20 minutes to enjoy this over lunch or a snack!

Commentary… Correlation, Causation, Beta, Dispersion & Diversification

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How do you like our title so far? Yes, this is going to be one of those consolidation updates… where we belabour the use and abuse of statistical terminology and try to help you unravel what it all means. You won’t be surprised to hear me blame the media for all the confusion out there, because they cause it. And, yes, that is a causal relationship, not a correlation. Going beyond the correlation/causation distinction, you can’t use either one of those alone to pick stocks or manage your portfolio. You need to know something about dispersion and what all of this means when it comes to diversification.

Portfolio Construction & Maintenance

SYNOPSIS
We had a nice surge to the upside last week for a change. Sadly, the S&P/TSX Venture Index continued to decline. The US index trend values turned positive again, while the Canadian measures are still in negative territory.

ProfiTrend Portfolio… The annualized growth rate for the ProfiTrend Portfolio is now at +96%, up from 90% last time. In spite of weak broad market conditions, we’re still well ahead of the benchmark indexes.
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Commentary… Portfolio Construction & Maintenance
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This topic may sound boring compared to the buying and selling of stocks; but it is central to your long term objective… making as much money as you can as fast as you can! And, it still draws questions from our members here. For that reason, we offer an update on our current thinking on how to construct a workable portfolio within the relative trend analysis™ (RTA) framework, and offer some maintenance tips for more experienced traders, who may not have actually sat down and thought about portfolio management in quite a while.

2015 – First Half Review

SYNOPSIS
The major US indexes sold off again last week, in spite of a partial recovery on Thursday and Friday. The DJI managed a tiny gain over the week of 0.2%. At the other extreme the S&P/TSX Venture Index dropped nearly 5%! All trends in the major indexes that we chart each weekend are still negative.

ProfiTrend Portfolio… The annualized growth rate for the ProfiTrend Portfolio is now at +90%, up from 81% last time. In spite of negative broad market conditions, we’re still well ahead of the benchmark indexes.
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Smart Money… The latest State Street Investor Confidence Index results for June are re-published to those that missed them last week. The “smart money” continues to buy equities, not sell them, in spite of world events that fill our media these days. The Global ICI increased to 127.0, up 5.6 points from May’s revised reading of 121.4. Confidence among North American investors increased with the North American ICI rising 11.7 points to 142.9, up from May’s revised reading of 131.2. Meanwhile, the Asia ICI fell by 10.3 points to 87.6 while the European ICI fell 1.2 points to 102.5. The results for July will be out on July 28.
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Research Report… 2015 – First Half Review

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Nasdaq managed to gain 5.7% over the first six months of 2015, but that’s about as good as it got for major North American indexes. The S&P 500 managed a 2% gain, while the S&P/TSX Composite Index declined 2.3%. Typically, we spread out our quarterly coverage of the major indexes and sub-sectors over two consecutive issues of TrendWatch Weekly, but this time we’re packing everything into one edition. What’s more, we’ve expanded our coverage at the same time. You’ll be able to see detailed reports from both Q1 and Q2 separately, plus the overall first half YTD charts. Lots of charts and lots of highlights for you to digest. And, of course, we include the current outlook, which isn’t very favourable right now.

Options on ETFs: Beating “Average” Performance

SYNOPSIS
The major US indexes sold off again last week, while the S&P/TSX Composite Index managed a 1% gain… tied to Energy stocks. But only Nasdaq has a positive trend value right now.

ProfiTrend Portfolio… The annualized growth rate for the ProfiTrend Portfolio is now at +81%, down from 117% last time. In spite of negative broad market conditions, we’re well ahead of the benchmark indexes.
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Smart Money… The latest State Street Investor Confidence Index results for June are re-published to those that missed them last week. The “smart money” continues to buy equities, not sell them, in spite of world events that fill our media these days. The Global ICI increased to 127.0, up 5.6 points from May’s revised reading of 121.4. Confidence among North American investors increased with the North American ICI rising 11.7 points to 142.9, up from May’s revised reading of 131.2. Meanwhile, the Asia ICI fell by 10.3 points to 87.6 while the European ICI fell 1.2 points to 102.5. The results for July will be out on July 28.
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Commentary… Options on ETFs: Beating “Average” Performance
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There are really just two primary reasons to buy ETFs: (1) They outperform mutual funds 85% of the time with far lower management fees, and (2) They offer instant diversification within a single purchase (if that is important to you). The downside is that for many of us, that’s not good enough. Each ETF is typically based on an index, which is the average performance of the stocks in that index (including the best and the worst). That’s why the stock picker, who buys stocks that are outperforming the index, will always have an advantage. The exception is when leverage is applied to ETFs! We’ve talked about x2 and x3 leveraged ETFs before, but this week we discuss how using listed options on ETFs can provide you with far more control over the specific leverage you want, relative to the amount of risk that you can tolerate.

Seasonality… We started coverage of calendar effects for July last week by providing the numbers that show that it’s usually a much better month than June. This week we dig into which sectors tend to perform best. We also have some commentary on the 4th of July trade for 2015.

A Greece-y Slope!

SYNOPSIS
The major US indexes sold off again last week, while the S&P/TSX Composite Index managed a 1% gain… tied to Energy stocks. But only Nasdaq has a positive trend value right now.

ProfiTrend Portfolio… The annualized growth rate for the ProfiTrend Portfolio is now at +117%, down from 147% last time. In spite of soft broad market conditions, we’re well ahead of the benchmark indexes.
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Smart Money… The latest State Street Investor Confidence Index results for June have just been published. The “smart money” continues to buy equities, not sell them, in spite of world events that fill our media these days. The Global ICI increased to 127.0, up 5.6 points from May’s revised reading of 121.4. Confidence among North American investors increased with the North American ICI rising 11.7 points to 142.9, up from May’s revised reading of 131.2. Meanwhile, the Asia ICI fell by 10.3 points to 87.6 while the European ICI fell 1.2 points to 102.5. The results for July will be out on July 28.
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Commentary… A Greece-y Slope!
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We don’t normally displace a topic we’ve been working on due to a “breaking news” type of event, but we decided to switch gears and talk about Monday’s large one-day drop. We were waiting for Tuesday’s State Street Investor Confidence data anyway, so our publication schedule wasn’t disrupted much.
Greece, Greece, Greece, Greece, Greece, Greece, Greece, Greece is all we’ve been hearing about for the past couple weeks; so it should come as no surprise that news breaking over the weekend about bank closures there scared investors worldwide into selling stocks on Monday. All the major North American indexes lost 2% or more in a single day. But did this really have anything to do with Greece at all? We doubt it, but you can decide for yourself whether or not to believe our arguments in this week’s TrendWatch Weekly. We’ve even included a featured video interview with Marc Faber, the editor of Gloom, Boom & Doom Report. It originally appeared yesterday (Monday, June 29), so it’s timely. Watch it via this link, or see it embedded in the full newsletter.

Putting the Pieces Together in Uncertain Times

SYNOPSIS
The major US indexes rose last week, as did the S&P/TSX Venture Index. The S&P/TSX Composite Index and S&P/TSX Small Cap Index continued lower. Nasdaq continues to be the trend leader, but all major Canadian stock indexes are still trending lower.

ProfiTrend Portfolio… The annualized growth rate for the ProfiTrend Portfolio is now at +147%, up from 100% last time. In spite of soft broad market conditions, we’re well ahead of the benchmark indexes.
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Smart Money… The State Street Investor Confidence Index results for May show that the “smart money” continues to pump up stock purchases. The Global ICI increased to 120.8, up 7.0 points from April’s revised reading of 113.8. Confidence among North American investors increased with the North American ICI rising 8.0 points to 129.4, up from April’s revised reading of 121.4. Meanwhile, the Asia ICI rose by 7.4 points to 98.6. However, the European ICI fell 5.5 points to 103.8. The results for June will be out on June 30.
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Commentary… Putting the Pieces Together in Uncertain Times
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For weeks now we’ve been in a quandary about overall market conditions. The trend for Canadian stocks is decidedly down (but not all that consistently yet), while US stocks are holding in a 50:50 pattern. Half the stocks have positive trends, half negative. So, what do we do under these circumstances? This week is a walk-through of how I will be trading within the current market outlook. There will be tips for newcomers, and updates on strategies for the seasoned relative trend analysis™ (RTA) users among our membership.